Affinius Capital on The Path to Lift-Off for Commercial Real Estate
(Photo courtesy of Jan van der Wolf via pexels)
Commercial real estate capital markets are transitioning toward normalization after several years of constrained liquidity and valuation adjustment, according to Affinius Capital, San Antonio, Texas.
“While liquidity is returning unevenly, transaction evidence across public and private markets suggests much of the repricing has occurred, even as appraisal-based valuations remain uneven and inconsistently marked,” the firm’s North American House View report said. “The next stage of the cycle is increasingly defined by relative value, sector dispersion, and execution-driven outcomes.”
In addition, as banks and insurers recalibrate under evolving regulatory and capital frameworks, nonbank lenders play an increasingly central role in CRE finance, Affinius noted. “Real estate credit continues to offer an attractive opportunity, supported by conservative underwriting and tangible collateral. Structural demand for gap capital, construction lending, and senior mortgages persists as the market works through refinancing and recapitalization needs,” the report said.
Other report findings include:
A “Bifurcated” Economy Anchored by AI Investment: Economic momentum is decelerating across much of the economy, as labor market softening and mounting strain on lower-income consumers dampen demand. “The key exception remains AI-driven capital investment, which continues to support pockets of resilience through productivity gains and outsized spending,” the report said.
Data Centers and Power Infrastructure Constraints: Demand for data center capacity continues to accelerate. But power availability has emerged as the binding constraint. “This imbalance is reshaping market geography, redirecting investment toward U.S. and European markets with favorable energy profiles,” Affinius said. “The resulting scarcity supports long-term pricing power for developers able to secure and deliver energized capacity.”
Housing, Industrial, and Foundational Strategies in an Early Recovery: Supply pipelines in the multifamily and industrial sectors are contracting sharply following several years of elevated deliveries. This sets the stage for improving fundamentals as capital availability gradually improves. “Foundational strategies, particularly open-end funds with measured exposure to develop-to-core execution, are positioned to benefit from a new liquidity cycle,” Affinius said.
Placemaking and Mixed-Use Rent Premiums: Finally, as the cycle shifts toward execution and tenant selectivity, placemaking is becoming a more important driver of relative performance. “This trend is supported by consistent rent premiums in mixed-use environments, particularly within high-quality urban nodes,” the report noted.
